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Scientific Journal WSFiP Nr 1/2017
99
DOI: 10.19192/wsfip.sj1.2017.7
Danuta SZWAJCA∗
THE IMPORTANCE OF REPUTATION
OF A COUNTRY IN THE PROCESS OF BUILDING
ITS COMPETITIVE ADVANTAGE ON THE GLOBAL
MARKET
Summary
In the contemporary information era countries compete with one another on many
levels and almost in every field of life. Governments prepare comprehensive
development strategies, thanks to which they hope to improve their country’s
competitiveness and gain better competitive advantage on the global market. Methods
and tools which are becoming more and more popular in preparing these strategies are
similar or identical to those traditionally used in business management. The sources of
competitive advantage are more and more frequently found in the domain of immaterial
assets. Currently one of the most valuable merit which helps build the worth and
competitive advantage of a country is its reputation. This paper attempts at explaining
the importance of reputation of a country in building its competitive position on the
global market and explaining its main determinants which are the basis for assessment
of their reputation. To achieve these goals the author used methods of literature
research and analysis of a reputation study conducted by the Reputation Institute.
Key words: country reputation, country image, national brand, reputation indicators,
reputation ratios
Introduction
In light of increasing competitiveness between countries not only on
continental but also on local scale, governments and public institutions
undertake steps to raise the level of competitiveness of their country’s
economy, to improve its innovativeness and macroeconomic results.
Such efforts aim at attracting new external investments, finding new
sources of financing for projects, tempting skilled workers, tourists and
∗
Professor Danuta Szwajca, Silesian University of Technology, Department of
Organisation and Management, Institute of Economics and Information Technologies,
Danuta Szwajca
100
new residents. To achieve these aims various management methods and
tools traditionally used in the world of business are applied. An
extremely useful instrument here is the instrument of international
marketing by means of which various unique virtues of a given place
such as: local products, unique natural resources, convenient investment
environment, attractive sights, beautiful landscapes, hospitable locals are
promoted.1
In the contemporary, knowledge based, information and economy
era, one of the most basic resource which guarantees strategic advantage
and development prospects is reputation. Its significance is
systematically rising due to a large number of dynamic changes
occurring in the social, political, cultural and technological environment.
The most vital changes are: increase in the impact of stakeholders
(especially media, NGOs, law and regulatory institutions that make laws
of international reach), technological advancement in the area of media
and communication which allows access to information in real time, as
well as deepening globalisation processes which generate the need to
respect generally applicable ethical principles, as well as unification and
standardisation of activities within global supply chains2. Therefore,
good reputation has become important not only for businesses but also
for non-profit institutions, individuals (politicians, actors, artists,
scientists, athletes etc.), as well as countries and international
organisations.
The aim of the paper is to highlight arguments justifying the
significance of reputation of a country in building its competitive
position on the global market and to identify main attributes that underlay
the evaluation of reputation of nation states. The research methods used
by the author included the analysis of literature on the topic as well as
analysis of results of studies on reputation conducted by the Reputation
Institute.
1See: Supeková S., Janáková H., Interkultúrne aspekty medzinárodného marketingu,
Wolters Kluwer, Bratislava 2014. 2Compare: D�browski T. J., Reputacja przedsi�biorstwa. Tworzenie kapitału zaufania.
Oficyna Wolters Kluwer Business, Kraków 2010, pp. 14-24; Szwajca D., Ryzyko
reputacji jako wyzwanie dla mened�erów w erze globalizacji, ‘Organizacja
i Kierowanie’ no 14/2014 (164), pp. 141-156.
The importance of reputation of a country…
101
1. Reputation versus image and identity of a country
According to a very general definition reputation is an opinion
people have on a given person, organisation, company or product3.
Reputation may thus refer to a person, character, place, organisation,
animal or object. In literature there is a greater number of definitions of
reputation used with respect to organisations (businesses). One of the
most popular definition was formulated by Ch. Fombrun and C. van Riel,
according to this definition reputation is an aggregated evaluation of past,
present and planned activities of a business based on perception of
different groups of stakeholders; it is a subjective and collective
evaluation of everything that makes an organisation credible and
trustworthy4. The elementary groups of stakeholders are: customers,
employees, investors, business partners, public administration, media,
local communities and the society as a whole. These groups formulate
their opinions about a company not only on the basis of the information
the company sends to the outside world by means of for example its
advertising campaigns but also on their own personal experiences and
opinions of other entities who came in contact with the company, its
products, services and employees. Own experience and observations of
people have a crucial meaning because they allow for verification of
actions with words, it is on this basis that the trust of stakeholders is
formed and trust is the foundation of reputation5.
With respect to what was said above, the reputation of a company is
not equal to its image, which is defined as a way of perception of a given
object, and to be more precise, constituents of its identity formed during
processing of information coming from different sources. Image is the
picture people have in their minds of themselves, other people or objects;
it is the picture of a company’s identity in the consciousness of
recipients6. Therefore, the image of a company can be defined as
a certain picture or visualisation created in the minds of recipients, this
picture may be "artificially" shaped by commercials, advertisements or
3
Inny Słownik J�zyka Polskiego, PWN, 2nd Edition, Warszawa 2014, p. 437. 4 Fombrun Ch. J., van Riel C. B. M., The reputational landscape, Corporate Reputation
Review, 1997, 1(1), p. 10. 5 Szwajca D., Zarz�dzanie reputacj� przedsi�biorstwa. Budowa i odbudowa zaufania
interesariuszy, CeDeWu, Warszawa 2016, p. 88. 6See: Figiel A., Reputacja w zarz�dzaniu przedsi�biorstwem. Uj�cie marketingowe,
Cracow University of Economics Publishing House, Kraków 2013; Krawiec F.,
Kreowanie i zarz�dzanie reputacj� firmy, Difin, Warszawa 2009.
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102
PR activities7. Image results from perception, reception and interpretation
of identity elements, which make it possible to identify a given company
and differentiate it from the rest, especially its direct competitors.
Identity of an organisation embraces visual constituents, such as its
name, logo, symbols, colours, architecture, decor of buildings, staff
uniforms etc., and elements such as attitudes and behaviour patterns of
members of this organisation with special emphasis on communication
with the outside world. Identity is born within, image and reputation, on
the other hand, are born outside of the organisation.
The concepts of reputation, image and identity may analogically be
used with respect to countries:
• reputation of a country is a relatively well-established opinion various
groups of internal and external stakeholders hold about this country on
the basis of evaluation of its natural merits and activities of its
residents;
• image of a country is a way of perception of its identity by internal
and external observers on the basis of information coming from
different sources;
• identity of a country is a system of visual elements i.e. name, national
emblem, colours of the flag, cultural monuments, works of art,
landscapes, architecture as well as traditions, customs, attitudes,
patterns of behaviour especially with respect to foreigners. Relations
between these categories are shown in Image 1.
7Chovanová Supeková S., Foret M., Szwajca D., Happ E., Pr�ša P., Marketing
communications in the conditions of V4 countries, ForPress Nitrianske Tla�iarne, s.r.o.,
Nitra 2016, pp. 82-89. Wojcik K., Public Relations od A do Z, Volume I, Agencja
Wydawnicza Placet Warszawa 2001; Davis A., Public Relations, PWE Warszawa 2007.
The importance of reputation of a country…
103
Image 1. Reputation versus image and identity of a country.
Source: Own work.
Image of a country results from the perception of its identity by
different groups of observers (stakeholders). Reputation is an assessment
of a country made on the basis of notions and associations people have
about it i.e. on the basis of the image created in consciousness of
recipients of the image. In this way, image is one of the instruments of
shaping reputation. Besides, reputation is built by means of experiences
stakeholders have due to contacts with a given country and, in
consequence, the reinforced image may be updated in plus or in minus
for a given country. Thus, reputation may also have an impact on image –
these two are interrelated.
The entities which take part in reputation evaluation process i.e.
stakeholders may be divided into external and internal. External
stakeholders include: institutions of public administration (the
parliament, the government, ministries etc.), tourists, media (traditional
and modern), investors, businesses (local and international), business
partners and contractors, international institutions of control and
supervision (the so called regulators), NGOs, opinion shapers (politicians
and economists), public opinion, international community. Internal
stakeholders include residents as natural persons (citizens, customers,
consumers, patients etc.) as well as members of various organisations
(businesses, offices, institutions, NGOs). Reputation of a country as an
Country’s
identity
Country’s image
Country’s reputation
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outcome of perception of various groups of stakeholders is influenced by
the following factors:
• direct experiences of stakeholders, their personal contacts with
representatives of a given country on different levels: international,
interorganisational and interpersonal,
• communication activities and initiatives of representatives of the state:
parliaments, governments, organisations, businesses, individual
persons
• influence of third parties i.e. opinions, reports, ratings etc. developed
by various international bodies, stereotypes i.e. widely held believes
reinforced by the media and other opinion shaping centres with
respect to particular countries and their residents.
Reputation and image of a country are related to the notion of the
national brand. The national brand is defined as a comprehensive
composition of image and reputation which constitutes a sum of
functional and emotional values transmitted by a country to the outside
world, the values are well-known, appreciated and desired by
stakeholders of the brand i.e. organisations, groups and individuals which
exert influence on the country and vice versa. The national brand is
a sum of generalised experiences of its stakeholders8. Thus, the image of
a country as well as its reputation are treated as key constituents in
building the national brand which represents relevant, unique values and
attributes of a given country and its society.
2. Instruments and factors building a country’s reputation
Reputation of a country is shaped as a result of conscious, intended
activities of its representatives (governments, public institutions, NGOs
and the like) but also of objective events and actions of entities which are
impossible to control - businesses, organisations, institutions as well as
ordinary citizens. According to S. Anholt countries are building their
reputation through exchange of material and immaterial values through
the following six communication channels:9
8 Olins W., O marce, Instytut Marki Polskiej, Warszawa 2004, p. 281.
9 Anholt S., To�samo�� konkurencyjna. Nowe spojrzenie na mark�, Instytut Marki
Polskiej, Warszawa 2007, pp. 39-40.
The importance of reputation of a country…
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• brand export – it refers to offering products from well-known brands
which are the showcase of the country of origin and clearly exposing
this fact (made in Poland);
• internal and external policy – political decisions and steps which
impact the process of shaping the image of the country among its own
citizens as well as abroad;
• foreign investment and immigration – ways of acquiring foreign
investors, entrepreneurs, skilled workers, scientists, students etc.;
• culture and national heritage – cultural exchange with other countries
as well as export of a country’s national culture (works of literature,
film, music, sport achievements, honourable representatives of the
country);
• people – residents of a given country, well-known and respected
representatives of the world of science, politics, sport, media etc., as
well as ordinary residents who, by their behaviour and attitudes
towards foreigners, give evidence about the place;
• tourism – promotional activities of professional tourist organisations,
agencies and institutions, as well as own experiences of foreign
tourists visiting a given country in an organised or individual way.
In the author’s view these channels complement each other and make
up a kind of a hexagon (Image 2).
Image 2. Communication channels building reputation of a country.
Source: Own work based on Anholt, 2007.
REPUTATION OF
A COUNTRY
Foreign
investments and
immigration
Brand export Tourism
People
Culture and
heritage
Internal and
external policy
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It should be noted that scope of utilisation of a particular channel
depends on objective (i.e. geography, natural resources, history etc.) and
subjective factors (i.e. political system, culture, traditions, customs etc.).
One of the key groups of stakeholders consists of consumers who
evaluate a given country from the perspective of the quality of products
and services manufactured and delivered by this country’s businesses10
.
Product is the factor most easily associated with a given country.
Tourism, human potential or housing conditions are not as powerful as
the possibility to consume products available for everyone everywhere11
.
Buyers who do not dispose of full information about a product, take their
purchasing decision on the basis of the country of origin of the product or
brand taking into account its image and reputation. It is the so called
country-of-origin effect, or made in...)12
. M. Here�niak13
points out that
globalisation processes trigger creation of the so called hybrid products
whose country of origin is difficult to determine. Therefore, the country
of origin effect could be explained as association of a given product or
brand with one particular country which is the source of the product
regardless of the fact where exactly the product was manufactured. In
consequence, the country of origin concept can be replaced by the
country of origin of the brand concept. For instance, Toyota which has its
plants in Europe e.g. in Turkey, is still perceived as a reliable Japanese
brand.
3. Indicators of a country’s reputation
Reputation of a business or a country is an aggregated assessment of
an entity carried out by different groups of stakeholders from the
perspective of their various expectations, demands and criteria.
Reputation is then the effect of evaluation of many different aspects and
areas of activity which can be called attributes of reputation. These areas
are subject to evaluation within procedures of reputation assessment
worked out by various institutions, research centres or consulting
10
Caputa W., Kapitał klienta w budowaniu warto�ci przedsi�biorstwa, CeDeWu,
Warszawa 2015, pp. 216-222. 11
http://szapiro.pl/produkty-kluczem-do-budowania-silnej-reputacji-krajow/ 12
Sikora T., Efekt kraju pochodzenia w marketingu mi�dzynarodowym [in:] Duliniec E.
(ed.), Marketing mi�dzynarodowy: uwarunkowania, instrumenty, tendencje, PWE, II
edition, Warszawa 2009, p. 173 and n. 13
Here�niak M., Marka narodowa: jak skutecznie budowa� wizerunek i reputacj� kraju,
PWE, Warszawa 2011.
The importance of reputation of a country…
107
agencies. One of the most popular methodologies of assessment of
corporate reputation is a procedure used by Fortune magazine which
since 1983 has been conducting annual opinion polls among executives
and management specialists from various industries. The respondents
evaluate businesses in the following areas: products/services quality,
innovation, quality of management, long-term investment, social
responsibility, people management, financial soundness, use of corporate
assets, global competitiveness. For each area 11-point-scale is used. The
obtained data when averaged produce Overall Reputation Score – ORS
for each business14
.
As far as countries are concerned, Reputation Institute has been
measuring their reputations rigorously since 1999. Indicators of
countries’ reputation (so called Country RepTrak®
Pulse) are calculated
on the basis of 16 attributes within three groups (Image 3):
• effective government: safe place, ethical country, responsible
participant in the global community, progressive social and economic
policies, operates efficiently, favourable environment for business,
• appealing environment: friendly and welcoming, beautiful country,
appealing lifestyle, enjoyable country,
• advanced economy: contributor to global culture, high quality
products & services, well-educated and reliable workforce, well-
known brands, values education, technologically advanced.
Evaluation of these attributes is conducted by residents of G8 group
countries (France, Japan, Canada, Germany, Great Britain, Italy, the USA
and Russia) who fill in an online questionnaire (CAWI). In 2016 58,000
respondents took part in the study.
14
Fryxell, G. E., Wang J., The Fortune corporate “reputation” index: Reputation for
what? Journal of Management, 20, 1, 1994, pp. 1-14.
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Image 3. Country reputation attributes by Reputation Institute.
Source: 2016 Country RepTrak®, The Most Reputable Countries in the World, 23 June
2016, p. 6.
Reputation indicators of a country are placed on the scoring scale
from 0 to 100 and may be divided into the following categories:
• excellent (score above 80),
• strong (score 70-79),
• average (score 60-69),
• weak (score 40-59),
• poor (score below 40).
The importance of reputation of a country…
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Table 1. Reputation indicators for 10 best countries in the world in 2016
(according to Reputation Institute).
2016 Country RepTrak®Pulse
Effective Government
Appealing Environment
Advanced Economy
Sweden 78,34 Sweden 76,8 Canada 80,2 Japan 77,8
Canada 77,82 Switzerland 75,6 Sweden 79,4 Sweden 76,7
Switzerland 77,00 Norway 75,1 Italy 79,1 Switzerland 75,0
Australia 76,84 Finland 74,6 Australia 78,5 Germany 73,5
Norway 76,18 Canada 74,4
, Norway 78,2 France 72,9
Finland 75,16 Denmark 73,6 Switzerland 78,1 Canada 72,8
New Zealand 74,68 Netherlands 72,7 Ireland 77,4 Norway 72,6
Denmark 74,25 Australia 71,6 Finland 77,1 UK 72,0
Ireland 74,11 Austria 71,2 New Zealand 77,0 Netherlands 71,8
Netherlands 73,90 New
Zealand 70,7 Netherlands 76,0 Finland 71,7
Source: Own work based on 2016 Country RepTrak®. The Most Reputable Countries in
the World. 23 June 2016.
As it can be seen, top positions are occupied by Scandinavian and
island countries, these countries are well known for their neutrality and
legal order. Countries with highest reputation scores are respected, above
all, for lack of corruption, clean natural environment, high level of
prosperity, well-being and friendly locals. Poland, with score 56,71,
occupies 27th place which is between the USA (56,32) and Thailand
(57,00). The United States achieve high scores in areas which are
referred to as ‘rational’ i.e. advanced technology or strong brands made
in America, but when it comes to ‘emotional’ categories such as trust,
respect and admiration the score is rather weak. Out of all countries on
the list as many as 71% received reputation score below average.
It is worth mentioning that countries with biggest population (China,
India, the USA, Indonesia or Brazil) or these with the highest GDP (such
as the USA, China, Japan, Germany or Great Britain) do not enjoy good
reputation (Table 2). The 10 top countries are the least corrupted, most
peace-loving countries and their people are the happiest in the world.
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Table 2. Countries according to population, GDP, happiness, peace and
corruption.
No. POPULATION GDP HAPPINESS PEACE
INDEX
LEAST
CORRUPT
1. China USA Denmark Iceland Denmark
2. India China Switzerland Denmark Finland
3. USA Japan Iceland Austria Sweden
4. Indonesia Germany Norway New Zealand New Zealand
5. Brazil UK Finland Switzerland Netherlands
6. Pakistan France Canada Finland Norway
7. Nigeria India Netherlands Canada Switzerland
8. Bangladesh Italy New Zealand Japan Singapore
9 Russia Brazil Australia Australia Canada
10. Mexico Canada Sweden Czech
Republic Germany
Source: Own work based on 2016 Country RepTrak®, The Most Reputable Countries in
the World, 23 June 2016.
Due to strong dynamics of changes occurring both globally as well as
locally, the reputation levels of countries fluctuate year to year. Some
countries improve their reputation, others show a negative trend. In 2016,
as compared to 2015, the following countries improved their reputation:
France, Russia, Peru, Bolivia, Italy, Czech Republic, Portugal, Paraguay,
Ireland, Iraq. The following countries, however, observed a fall in their
level of reputation: Turkey, Saudi Arabia, Belgium, Greece, Nicaragua,
Egypt, India, Ecuador, Morocco, the United Arab Emirates and
Germany.
4. Benefits coming from good reputation
In case of businesses good reputation generates a number of tangible
benefits such as: increase of revenues from sales, lower cost of capital,
availability of the best workforce, smaller risk of conducting business
activity etc. Companies with strong positive reputation achieve much
better financial results15
.
15
Burke R. J., Martin G., Cooper C. L., Corporate Reputation. Managing Opportunities
and Threats, Gower Press, London 2011, pp. 4-5.
The importance of reputation of a country…
111
In case of countries, their good reputation translates in many positive
results in the area of economy, politics, society and culture. These
benefits are reflected in activities and behaviour patterns of
representatives of other countries both on the level of organisation
(businesses, institutions, public administration organs), as well as natural
persons (buyers, tourists, workers, students, residents). Consequently,
friendly business environment attracts investors and entrepreneurs whose
activities contribute to the development of regions and the whole country.
New enterprises create new work places, fuel the national budget with
taxes they pay, build infrastructure, pass on know how, disseminate new
technological developments, come into cooperation with local suppliers
etc. Attractive natural environment, traditions, cultural heritage, scientific
centres, well-known products tempt tourists to visiting, consumers to
buying national products, young people to studying, workers to looking
for employment and settling down on long-term basis. Efficient
management assuring peace, security, legal order, respect for the code of
ethics, credibility of authorities and public institutions facilitates
establishing diplomatic contacts and cooperation in many aspects and on
many levels which may result in attracting international organisations to
the country, hosting important international events etc. Benefits
generated by key groups of stakeholders with respect to a country are
shown in Table 3.
Table 3. Good reputation benefits generated by key groups of stakeholders.
Stakeholders Main benefits
Investors
• Invest in the region
• Recommend as investment
• Benefit of the doubt
Companies
• Invest in the region
• Do business in the region
• Recommend to others
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Stakeholders Main benefits
People
• Work in the city/country
• Live in the region
• Study in the city/country
Tourists
• Visit the country/city
• Recommend
• Benefit of the doubt
Regulators • Recommend
• Benefit of doubt
• Support our activities
Media
• Consult before writing
• Use as case story
• Benefit of the doubt
Opinion makers
• Engage in dialogue
• Recommend
• Benefit of the doubt
Source: Own work based on 2016 Country RepTrak®, The Most Reputable Countries in
the World, 23 June 2016.
As it can be clearly seen, the benefits resulting from good reputation
are not only the effect of activities of particular groups of stakeholders
but come from attitudes towards others and dissemination of positive
opinion about a country, recommending its merits and values. The
foundation of these behaviour patterns is trust the stakeholders put in
a given country, its authorities and citizens.
Conclusions
Dynamic changes in economic, social, political and cultural life
trigger growth of importance in the process of building a competitive
position not only of businesses or other organisations or persons but also
of nation states. The reputation of a country is a multi-faceted assessment
made by internal and external stakeholders on the basis of their own
experiences and opinions as well as experiences of others. The reputation
determines behaviour patterns, attitudes and activities of particular
groups of stakeholders with respect to a given country. Good reputation
The importance of reputation of a country…
113
attracts investors, talented workers, tourists, consumers, scientists, artists
etc., what in turn contributes to development and improves competitive
advantage on the international arena. As a consequence, governments and
representatives put in every effort to facilitate positive perception of their
country through emphasizing its merits and values. International
organisations such as the Reputation Institute, measure reputation of
countries taking into account various factors and attributes which are
pertinent to three crucial areas: efficiency of the government policy,
attractiveness of natural environment and cultural heritage as well as the
level of the national economy and its contribution to the development of
the global economy.
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Danuta Szwajca
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